When is Refinancing Worth it?
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In the market for a mortgage loan? We'd be thrilled to discuss our many mortgage solutions! Call us at (207) 571-8034. Ready to begin? Apply Online Now.
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Ever hear the pearl of wisdom that says you should only consider refinancing if your new interest rate will be at least 2 points lower than your existing one? That may have been sound advice years ago, but since refinancing has been costing less in recent years, it is a good time to consider a new loan! A refinanced mortgage is often worth its cost several times over, considering the benefits that come, in addition to a lower interest rate.
Advantages
When you refinance, you might be able to lower the interest rate and mortgage payment amount, perhaps by a lot. Additionally, you might have the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or take your family on a vacation. With reduced interest rates, you might also be able to build up home equity faster by moving to a shorter-term mortgage.
Expenses and Fees
All these benefits do cost something, though. With your refinance, you're paying for a lot of the same things you paid for when you obtained your existing mortgage loan. Among these might be settlement costs, appraisal fees, lender's title insurance, underwriting fees, and others.
Do the Math
Paying points can get you a better interest rate. The money you will save over the life of the loan could be significant if you've paid up front about 3% of the new loan total. You might have heard that points may be deducted on your income taxes, but since tax regulations can be difficult to keep up with, please speak with your tax professional before making any decisions based on this.
Speaking of taxes, once your interest rate is lowered, naturally you'll also be reducing the interest amount that you'll be able to deduct from your federal income taxes. This is one more expense that some borrowers take into account. Call us at (207) 571-8034 to help you do the math.
Most borrowers find that the savings per month balance out the initial expenses of refinancing. We can help you explore what your options are, considering the effect a refinance might have on your taxes, how likely you might be to sell in the near future, and your cash on hand. Call us at (207) 571-8034 to get started.
Want to know more about refinancing your home? Give us a call: (207) 571-8034.